Vietnam’s economy will continue to roar ahead in the coming few years while ASEAN, with the exception of Malaysia, will experience moderate recovery, according to ICAEW’s latest Economic Insight: South East Asia report. ICAEW is a world leading professional membership organization supporting 144,000 chartered accountants in 160 countries, often offering economic advise that help to shape government policy.

Amongst the six major ASEAN economies reviewed by the report, Vietnam, the Philippines and Indonesia are expected to have the best growth prospects of 6.3%, 6.1% and 5.1% in 2016.

GDP growth is expected to stay in the 6 to 7% range from 2016 to 2018 as improvement in trade access compensates for slowdowns in some key trade partners.

The country’s economy has also diversified with the growth in non-textile industries.

‘As ASEAN and global economies continue to struggle with the challenging backdrop, it is natural to question to what extent the rise of China and the commodity super-cycle were mistaken for structurally robust growth in some countries’, said Tom Rogers, ICAEW Economic Advisor and Associate Director, Oxford Economics.

“The best performers in ASEAN-6 will be economies where growth is underpinned by strong domestic fundamentals and there is also room for policy support. In this respect, we believe that Vietnam, the Philippines and Indonesia have the best growth prospects amongst the ASEAN-6 countries, reflecting healthy domestic factors such as low debt, macro-stability and wage competitiveness. These will help them to continue gaining market share in low-cost industries.”

The effect of slower growth in China will vary across the ASEAN nations. China is the largest trading partner for Singapore, Malaysia and Thailand, and the first two countries are most vulnerable to weakness in the Chinese economy because of their place in the regional supply chains for electronic goods. The declining demand and prices for commodities will also be a cause of concern.

Indonesia, the Philippines and Vietnam are less exposed to manufacturing sectors where China has excess capacity. Their wage competitiveness means that developments in China should not significantly constrain their continued industrialization.

“As ASEAN countries continue to reform their economies and experience moderate growth in the next few years, there will still be periods of financial market volatility as they adjust to China’s new growth trajectory,” said Mark Billington, FCA, ICAEW Regional Director for South East Asia. “A deeper-than-expected slowdown in China is the key threat to ASEAN economies, along with more acute financial market volatility and a tightening of financial conditions as industrialized countries normalize monetary policy, and this will be particularly painful for countries that have high debt levels.”